Wal-Mart Struggles in Japan

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Case Details:

Case Code : BSTR186
Case Length : 20 Pages
Period : -
Organization : -
Pub Date : 2005
Teaching Note :Not Available
Countries : -
Industry : -

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Background Note

In 1962, Sam Walton (Walton) and his brother James Lawrence "Bud" Walton opened the first Wal-Mart store in Rogers (Arkansas), USA. In the first year of its operations, the store registered sales of over $1 million. Initially, the Waltons concentrated on opening stores in small towns and introduced innovative concepts such as self-service. By 1967, Wal-Mart had 24 stores with sales of $12.6 million.

Encouraged by the early success of Wal-Mart, Walton expanded Wal-Mart's operations to Oklahoma and Missouri in 1968. In the following year, Wal-Mart was incorporated as a company under the name Wal-Mart Stores Inc. In 1970, Wal-Mart established its first distribution center in Bentonville, Arkansas. The same year, it was also traded for the first time as a public limited company in over the counter⁹ stock trading. In 1972, Wal-Mart was listed on the New York Stock Exchange. Wal-Mart continued to grow in the 1970s, benefiting from its highly automated distribution system, which reduced shipping costs and time, and its computerized inventory system, which speeded up the checkout and reordering of stocks.

Business Strategy | Case Study in Management, Operations, Strategies, Business Strategy, Case Studies

By 1975, there were 125 Wal-Mart stores in operation with sales of $340.3 million and 7,500 employees. The famous 'Wal-Mart Cheer' was introduced by Walton in the same year to foster cooperation and team spirit among employees (Refer Exhibit II for the Wal-Mart Cheer). In 1978, Wal-Mart purchased the Hutcheson Shoe Company, and later set up pharmacy, auto service center, and jewelry divisions.

By 1980, Wal-Mart had 276 stores with annual sales of $1.4 billion and by 1984 the number of stores increased to 640 with annual sales of $4.5 billion and profits of over $200 million. In the 1980s, strong customer demand in small towns led to the rapid growth of Wal-Mart.

Wal-Mart succeeded in smaller towns because it offered low prices and catered to the specific needs of small towns. It offered the kinds of products that were most in demand by customers and fixed the store's business hours according to its customers' convenience. This made Wal-Mart more popular than the local stores which offered limited selection and had high mark-ups...

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9] Stocks not traded through a stock exchange are traded 'over the counter'. OTC stocks comprise stocks of small companies that are unable to meet the listing criteria of stock exchanges and are therefore traded electronically via a network of dealers.